Dror Ortho-Design, Inc. 10-K

ITEM 1. BUSINESS. Novint Timeline and Detailed Business Description Novint Technologies (Other OTC: NVNT) was initially incorporated in the State of New Mexico as Novint Technologies, Inc. in April 1999. On February 26, 2002, the company changed its state of incorporation to Delaware by merging into Novint Technologies, Inc., a Delaware corporation (“Novint” or the “Company”). The Company went public in 2001 with the goal of commercializing haptics technology licensed from Sandia National Labs and developing a revolutionary haptic game controller for computer video gaming and other computer applications based on this technology. Haptics technologies allow people to use their sense of touch to interact with computers. The company was based in Albuquerque, New Mexico, near Sandia National Labs. During its first eight years, the Company derived revenue primarily from developing professional applications for customers, including contracts with companies such as Aramco, Lockheed Martin, Chrysler, Chevron and Sandia National Laboratories. However, the Company’s intent was to eventually generate most of its revenues from the sale of the revolutionary consumer Falcon product (described in the sections below), the associated “grips,” or handles that are shaped to mirror the application that the product is being used to simulate, (e.g., a gun handle, a sword handle, or a steering wheel) and the sale or license of specially enabled computer games designed to be used with the Falcon. The Company’s product that was commercially released in 2007, the Novint Falcon game controller, lets users experience video games and other computer applications using a realistic and detailed sense of touch referred to as a “haptic” feel. Holding its handle, users feel the shapes, textures, weight, dimension and force feedback effects in software games that have been enabled to work with the Falcon. These “feelings” that are felt in the hand of the user that is holding the Falcon controller are generated by tiny nano vibrations that create sensations that simulate the real-life sensation of touch. As opposed to providing simple vibrations and feedback like Rumble Strip based joysticks developed by Immersion Corporation (IMMR), the Falcon uses patented nano-vibrations to create different “textures and “feels” while a person is holding onto the controller. For example, a person can tell the difference between a piece of rubber or wool as they hold the handle of the Falcon and run over the different materials on the screen. When firing a gun, the person gets a kickback and feeling based on the type of gun that is being fired and when a person is hit onscreen, they can feel what type of hit and from what direction the hit came from. Catching a baseball in a glove actually feels like the ball landing in glove while you are gripping the controller. The feelings are almost surreal and frightening at times. It is difficult to describe the experience without actually feeling it firsthand and this has certainly been one of the issues that has prevented significant sales traction for the product. Using the Falon and its haptics technology, games and applications have the crucial missing “third sense” to human computer interaction. In late 2006, BusinessWeek wrote that “Novint’s haptic controller, the Falcon, looks set to revolutionize gaming.” In 2007, the Company began shipping the Falcon to commercial retailers and distributors in the U.S. The product was available through retailers, including Fry’s, Tiger Direct, and J&R Music Store. Additionally, in the fourth quarter of 2007, Novint opened its online store for the sale of the Falcon and computer games integrated to work with the Falcon. Customers could download games for use with the Falcon by going to the Company’s website and purchasing the haptics enabled games. The Company developed many of its own gaming titles. The Company also licensed a number of better-known game titles and then had the Company’s programmers haptically enable these titles to take advantage of the haptic feedback and sensations using the Falcon controller. Novint’s programmers added these haptic parts to the play of the programming code of these games using manual customization. Over the years, the Company eventually commercialized over 45 titles available for use with the Falcon controller. The licensing agreements with various gaming software providers have all expired and are treated as terminated. Novint continues to be able to sell or provide for free as an accompanying software bonus along with the Falcon, a library of games that the Company developed internally and that is not subject to any current license agreements or future royalties. The single agreement that is referenced in Note 3 that accounts for all of the contingent accrued royalties was an agreement dated January 4, 2004 and an amendment dated July 24, 2007 between Novint Technologies, Inc. and Force Dimension, LLC, based in Switzerland. The Company believes, based on extensive due diligence including examining documents and interviews with prior management and employees, that Force Dimension , LLC failed to deliver the deliverables as specified in the agreement and that beyond the initial payments that Novint made, this obligation is no longer ongoing and the Company deems the agreement to be terminated. However, since there was never an official termination, as per ASC 405-20, the Company cannot derecognize the liability and thus the contingent liability remains in the December 31, 2020 financial statements as included in this Form 10-K. 4 There is a licensing agreement dated April 6, 2009 among Inverse Technology Corporation and Kinetecs, Inc., both based in Lincoln, Nebraska and Force Tek Enterprises, LLC of Cecil, Pennsylvania. When Novint merged with Force Tek in April 2011, as described in this Form 10-K, Novint assumed this license. The agreement contained a large initial payment that was paid by Force Tek and subsequent royalties based on sales of products that utilize the licensed technology. The technology from this license may be used in Novint's Xio product that has been in development, in which case the Company would be required to pay royalties on commercial sales as per the agreement, although there can be no assurances that Novint will be able to successfully commercialize the Xio product. Although the Company sold thousands of units, sales of the Falcon controller struggled without ever reaching a critical mass, continuing to this day. The Company did release dozens of software titles that were optimized to work with the Falcon as described above, however, the titles were not released fast enough and the cost of acquiring rights and haptically enabling the software was too large of a challenge for a small company. Additionally, as noted above, the Company was also not successful in finding a large company to work with to help market the Falcon more effectively and assist with the huge software development efforts that were necessary. Although the Company has not derived any revenue from the licensing of the Company’s technology for consumer console and PC interactive computer games, from time to time the Company has engaged in discussions with larger commercial partners. The Company has also performed R&D under contract for larger companies with the end goal of leading to commercial product development, but none of these efforts has led to commercial product deployments. Although the Company continues to make efforts in this area, there can be no assurances that the Company will be able to find partners for its products. In addition, pursuant to the patent sale and licensing arrangement described below, there are certain extensive restrictions on the ability of the Company to engage commercial partners on a go forward basis. The Company retained the right to enter into manufacturing arrangements to produce for others, or have manufacturer’s produce on behalf of Novint, the Company’s existing Falcon products based on their current or developed designs only, as well as the unreleased next generation designs of the Company’s Xio products. Force Tek Transaction In April 2011, Novint merged with Force Tek Technologies. Force Tek was a company started by serial entrepreneur Shannon Vissman that developed a full arm controller with forced feedback that could be used for gaming. Novint and Force Tek initially met at a gaming conference where the companies recognized the potential of being able to merge their complementary technologies into a single unified gaming controller that had much of the haptic feedback of the Falcon but in a portable controller that fits on a user’s arm. After the merger with Novint, Shannon Vissman and Ryan Christoff joined the Board of Novint, replacing Brian Long and Jan Richardson. On October 24, 2011, Tom Anderson resigned as CEO and Shannon Vissman of Force Tek became CEO. In connection with the merger, all debt of the Company was either paid off or converted to equity. Mr. Vissman, and to a lesser extent Mr. Christoff, provided equity funding of approximately $3 million at a fixed price per share for the combined company which continued to be known as Novint. This funding was used to merge R&D teams and to create a next generation game controller with the combined technologies, called the Xio, while continuing to support the company’s limited sales of the Falcon controller and related accessories and software. The integration work for the Xio was never completed, though various prototypes were developed. During this time, Novint also did some custom haptic projects, including work for the US army related to Xio prototypes, but it never amounted to a large business and the company was unsuccessful in obtaining any commercial production contracts as a result of this work. In August 2013, Brian Long, Jan Richardson, Tom Anderson and Shannon Vissman resigned from the board, leaving Ryan Christoff as the sole board member. Ryan appointed Orin Hirschman and Martin Chopp to the serve on the board alongside him. The Company then raised $55,180 in senior secured debt to continue operations. Since that time, Novint has worked to preserve cash and reduce expenses while continuing to sell small amounts of Falcons along with related accessories and software titles, with a goal of allowing the Company to maximize its resources. At that time, the Company also initiated a process to explore ways to further realize value from Novint’s patent portfolio, the Falcon hardware and related software, and the Company’s next generation Xio product. 5 In June 2015, after an extensive process, Novint sold 5 patents and sublicensed 5 patents to an undisclosed technology company for $750,000 upfront, and a potential second payment of $750,000 upon waiver of assignment from the DOE to Sandia. The second payment was paid in July 2016. Net of broker fees, legal expenses and payments to Sandia to release their rights to the IP, Novint received a total of $699,714 in the transaction. Novint retained a non-transferable license that allows it to continue selling Falcons and next generation devices such as the Xio that are based on the Company’s existing and anticipated designs. Since that time, Novint has continued selling small amounts of Falcons and related software and accessories while engaging in discussions with potential partners on Falcon and Xio and studying other ways to realize value from these products. Novint was clearly much too early in trying to pioneer the market for a consumer haptic controller. One of the major disadvantages of the original Falcon design that has been highlighted by customers and potential commercial partners was its size and weight and the need for the controller to be sitting on a desktop. The next generation product that Novint has developed but not completed, the Xio, addresses this issue by being lightweight and strapping onto the hand and forearm, however, as previously noted, the product has not been completed for commercial release and there can be no assurances that the product will be completed or commercially released in the future. Principal Products – Falcon The Novint Falcon is an extensible, grounded (e.g., desktop), three-dimensional (3D) haptic interaction device. It is a compact robotic device with characteristics optimized for real-time force-feedback and tactile interaction. The Falcon was specifically developed for consumer applications with an emphasis on interactive gaming. The performance characteristics of the device, however, are such that it has seen some wider application in fields such as education, medicine, scientific visualization, robotics and tele-robotics. The current consumer version of the Falcon consists of the Main Unit, a Stand and a “Grip” or end effector. The Main Unit is capable of generating high-fidelity, high-bandwidth, 3D forces and accurately sensing 3D position in real-time within its working envelope. The Main Unit has on-board computational capabilities and is programmed by and communicates with a host computer or system via a bi-directional USB communication interface. It is typically powered using an external DC power supply. The Main Unit has a modular, quick connect/disconnect, electromechanical interface (i.e., the Grip Interface) that allows various Grips to be mounted to it. This interface allows a Grip to be mechanically connected to the Main Unit and provides electrical power and communication with the Grip. When the Falcon is utilized as a haptic interaction device, it is the Grip that the end-user actually grasps and uses to interact with the device. The Grips themselves can have arbitrary shape and function. A Grip simply has to adhere to the mechanical and electrical constraints of the Grip Interface. Grips typically use on-board computational elements to report their state to the Main Unit via the serial communication channel of the Grip Interface. Two typical consumer Grips are a general-purpose spherical interface and a pistol shaped Grip typically used for game play and interaction. These Grips have various buttons and communicate their identity as well as button state via the Grip Interface to the Main Unit. The Main Unit is modularly mounted on a Stand. Consumer units are typically shipped with a “U” stand. The Falcon Main Unit can be mounted, however, on any stand or object that provides the appropriate mechanical interface and fasteners. The Falcon communicates with a host computer or system via a bi-directional USB communication interface at a 1 KHz data rate. Drivers and APIs/SDKs on the host side allow haptic interaction to be incorporated or added to various applications across various markets. Subsequent to the introduction of the current consumer Falcon haptic interface device, there have been a variety of improvements, features and options to the design of the device that have been implemented on a limited number of units for specific customers. Other significant changes have been designed for the device as product improvements or model variations. These changes to the device design have not yet made it to the shipping consumer version of the device but could do so given the appropriate timing and markets. For example, the current capstan cable drive mechanism for the Falcon utilizes a single spring tensioner. Under high-speed motions, this approach results in unequal cable tension between the cable on one side of the capstan and the other. This can lead to some slippage of the cable relative to the capstan when motor direction is abruptly reversed after a high-speed run. A drive system that helps guarantee balanced cable tension is one of the pre-planned product improvements for the Falcon. Another example would be the potential to decrease the electronics cost. The current consumer Falcon utilizes a Digital Signal Processor (DSP), along with other electronics elements, to implement the Falcon’s processing and communication system. Significant effort has been undertaken in designs where an ASIC is used for a major portion of these processing and communication requirements. This design will allow much more economical production of the Falcon for larger volume production runs. 6 There are other areas of potential improvement to the Falcon. The current consumer Falcon is relatively compact compared to other arm mechanisms. The radial twist employed in the “arm” design decreases the radial cross section of the device. Physical layout of the electronics is also optimized to decrease size. In addition, the U-shaped base helps to decrease the apparent size of the device. Nonetheless, further decreasing the apparent and real volume of the device is desirable for increased consumer acceptance. Ideally, this decrease would also reduce the cost of goods sold for the Falcon. Novint has outlined a fundamental approach where most of the encasing plastic for the Falcon Main Unit will be removed and the underlying plastic frame for the Falcon will be modified to be the exterior of the device as well as supporting the device mechanisms and electronics. This will significantly decrease the apparent size and volume of the Falcon. It also provides significant additional shape, color and opacity options to the look of the Falcon Main Unit including clear plastic options where the internal mechanisms and electronics are visible. A significant amount of effort has been taken in the design of potential consumer Grips. One major class of effort has revolved around variations in general purpose Grips for ergonomic and functional improvements. A significant number of custom variations of the Falcon have been designed and built over time. Typically, these developments have been for customers in the “professional” sectors (e.g., medicine, telerobotics, and scientific visualization). These variations have been based on the current consumer Falcon design and can easily be incorporated into the standard shipping Falcon line when appropriate. Novint has made several custom variations to the Falcon for specific customers and use cases. As part of its custom efforts, Novint developed improved control algorithms for the Falcon Main Unit that allow higher peak forces to be generated or lower forces to be maintained for longer periods of time. These developments were embodied in custom units referred to as “Super Falcons”. Fundamentally, these improvements involved changes the timing and pulse-width modulation motor control used in the control algorithms run on the Falcon Main Unit’s DSP. No changes to Falcon hardware are required. This allows a “Super Falcon” to be sold to consumers when appropriate. In addition, several fundamentally new Grip designs for the Falcon have been developed for custom customer applications. Consumer versions of these designs are possible. The Novint Falcon was designed, primarily, with consumer gaming applications in mind. The Novint Falcon was designed to be used for both PC and console gaming. All that is required to interface to the device is some form of serial interface (wired or wireless). Novint has also created in-lab prototypes of the Falcon that would be directly connected to gaming consoles. In addition to the Falcon device, Novint has been selling software and demonstrations for all gaming genres including Action, Adventure, Fighting, Racing, Simulation, Sport, Strategy, Parlor, Massively Multiplayer Online (MMO) and Miscellaneous (e.g., board games, pinball). Novint has also created a number of haptically enabled software applications across that would allow the Falcon to be utilized for many non-gaming uses. For example, Novint has developed medical simulation software for various injection procedures including: Epidural injections, Synvisc™ injection, Depo-Medrol™ injection and other injections. Novint has also developed software applications that allow a user to feel as well as see medical data. For example, CT Scan data can be probed using the Falcon and the difference between soft tissue and bone can be felt. Novint’s medical applications have typically been used both for medical marketing and procedure familiarization or training. In addition, Novint has developed specific software that works with the Falcon for marketing purposes. For example, Novint modified a game for Anheuser-Busch to use during its on-site marketing campaigns. Novint has also developed software applications where a Falcon’s motion is controlled via software or in real time using another (remote) Falcon. 7 Other Haptic Companies and Competition Recent developments over the last several years create the potential for more consumer interest in haptic devices and controllers. In 2016, Facebook released the Oculus Rift Virtual Reality (VR) headset which a consumer can wear on their head and experience virtual reality at a sub $1,000 price point. HTC started selling a similar headset and both companies also sell companion hand controllers. These controllers are small and lightweight, but offer limited haptic feedback compared to the Falcon. Over the last few years, and in particular in very recent periods, there have been a number of start-up companies working on new haptic controllers, including handheld devices that are similar to those controllers sold by Facebook and HTC, as well as more elaborate wearable haptic controllers including gloves. These devices are more similar to Novint’s next generation Xio design and are much more elaborate than the handheld controllers that are currently on the market. The sudden surge in development in this area would suggest that the field is beginning to gain much more interest following the commercial releases of the Oculus Rift and HTC products as well as similar headsets that are being introduced by other companies. In addition, there are many companies producing virtual reality and haptic devices that are competitive or may be competitive in the future with the Falcon and Xio. Some of the products and companies that may be competitive include: ● Immersion Corporation (NASDAQ: IMMR) is primarily a 1D or 2D haptics (a Haptic computer interaction in which forces are mechanically displayed to a user in 1 or 2 directions of movement; examples are force feedback joysticks and force feedback mice) hardware company. Immersion is a public company, which has acquired other haptics device companies. They have acquired Cybernet, Haptech and Virtual Technologies.VRgluv from VRgluv in Atlanta is a new product that is a glove for controlling virtual reality systems such as the Occulus Rift and HTC Vive. The glove has sensors throughout as well as force feedback and appears to be provide a very robust user experience. The company’s product appears be directly competitive with Novint’s Xio product.Microsoft has several haptic devices that simply vibrate and rumble, such as the control pads for their Xbox systems. Microsoft may be working on various haptic controllers to complement the company’s Hololens Virtual Reality headset that it has begun selling. Logitech sells haptics mice, wheels, and joysticks that they licensed from Immersion and that are primarily used for gaming. Logitech’s haptics products are two-dimensional and do not offer as many features as our products will. Microsoft has several haptic devices that simply vibrate and rumble, such as the control pads for their Xbox systems. Microsoft may be working on various haptic controllers to complement the company’s Hololens Virtual Reality headset that it has begun selling. Employees As of March 23, 2021 , we do not have any full-time employees in our workforce. Corporate and Available Information Novint Technologies was initially incorporated in the State of New Mexico as Novint Technologies, Inc. in April 1999. On February 26, 2002, the company changed its state of incorporation to Delaware by merging into Novint Technologies, Inc., a Delaware corporation. Our principal executive offices are located at 100 Merrick Road–Suite 400W, Rockville Center, NY 11570. Our telephone number is (866) 298-4420, and our website address is www.novint.com . The information contained in, or accessible through our website does not constitute a part of and is not deemed or otherwise incorporated by reference in this Annual Report on Form 10-K. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports, are available to you free of charge through the “Investors — SEC Filings” section of our website as soon as reasonably practicable after such materials have been electronically filed with, or furnished to, the Securities and Exchange Commission. Our shares of common stock are listed on Other OTC under the symbol “NVNT.” 8 ITEM 1A. RISK FACTORS Not required to be provided by smaller reporting companies. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES Currently, the Company does not lease or own any real property.